Saturday, November 27, 2010

Next Up: a "Flat Tax" for the Rich

The Endless Thanksgiving

The danger the United States faces today is that the government debt crisis scheduled to hit Congress next spring (when Republicans are threatening to vote against raising the federal debt limit as the government deficit soars) will provide an opportunity for the wealthy to give a coup de grace on what is left of progressive taxation in this country. A flat tax on wage income and consumer sales would “free” the rentiers from taxes on their property.

All governments have to levy taxes – that is, they have to tax somebody. Naturally, the super-rich would like this tax to be shifted off their shoulders onto those who have to work for a living. In diametric opposition to Adam Smith and other putative “founding fathers” of “free market” neoliberalism, the super-rich want to shift taxes off “free lunch” economic rent – off interest, dividends, rents and capital gains – onto wage-earners.

This tax shift already has been underway for the past thirty years. It has doubled the proportion of the returns to wealth (interest, dividends, rents and capital gains) enjoyed by the wealthiest 1 per cent, from a reported one-third in 1979 to an estimated two-thirds of the U.S. total today.

This regressive tax shift off wealth onto wage earners has occurred in three ways. The largest and most egregious was the Greenspan Commission’s ploy of moving the cost of Social Security and Medicare out of the general budget (where it would have to be financed by taxpayers in the higher brackets) onto the bottom of the scale in 1982.

Instead of being treated as “entitlements” paid by the highest tax brackets, it is treated as “user fees” by employees with a cut-off (currently about $102,000) for higher-income earners. The pre-saved “Social Security fund” was invested in Treasury bills and then lent to the government – enabling it to cut taxes on the higher brackets. “Social Security and Medicare” became a euphemism for giving the government enough “forced saving” of labor so that the Treasury could cut taxes on the higher income and wealth brackets.

This First Great Republican Tax increase was folded into a reduction in tax rates across the board – above all on the highest tax brackets. This has been ongoing since 1981. The 1981 tax “reform” also gave an accelerated depreciation allowance to absentee property owners, permitting them to pretend that their real estate was losing value even as it was soaring in market price. The effect of this “fictitious property accounting” was to free the real estate industry as a whole from having to pay income tax. (The loophole was not available to homeowners!) The rental income thus “freed” was available to be paid to banks as interest.

Meanwhile, at the state and local level, governments have scaled back property taxes and replaced them with income taxes and sales taxes. These taxes fall mainly on wages and on consumer goods, not financial and property income.

The trick has been for Republicans (and “Blue Dog” Democrats) to pose as “tax cutters” rather than tax shifters. Many wage earners now pay more in FICA paycheck withholding and other taxes cited above than they do in income tax. These changes over the past thirty years have reversed the 20th century’s tendency toward progressive taxation with a regressive tax system.

The 2000 Republican presidential primaries saw Steve Forbes run on a plank that would be the capstone of this tax shift off wealth: a “flat tax,” one that would do away with taxing the wealthy more than blue-collar labor. Mr. Forbes was laughed out of the presidential primaries for proposing this flat tax. It was promoted as being “tax simplification.” The problem was that it is so “simple” that it falls only on employees and their employers as a wage tax.

The details are much more regressive than seem at first glance. The flat tax actually would tax wage earners much more steeply than the wealthy, whose income it would largely exempt! The flat tax is supposed to fall on employment, not returns to wealth. Employees and their employers would pay the tax, as they pay today’s 12.4 per cent FICA paycheck withholding, but the flat tax would not be levied on financial and property income.

The flat tax is supposed to be accompanied by a European-style regressive value-added tax (VAT). By taxing “value,” it essentially falls on labor – as in “the labor theory of value.” The tax does not fall on “empty” pricing in excess of value – what the classical economists termed “economic rent,” that element of price (and income) that has no counterpart in actual cost of production (ultimately reducible to labor) but is a pure free lunch: land rent, monopoly rent, interest and other financial fees, and insurance premiums. This economic rent is the major return to wealth. It is grounded in the finance, insurance and real estate (FIRE) sector.

The effect of untaxing the FIRE sector is twofold. First, it increases the power of wealth, privilege, monopoly rights and property over living labor – including the power of hereditary wealth over the living. Second, it helps “post-industrialize” the economy, creating a “service” economy. A service economy is mainly a FIRE-sector economy.

Can a regressive flat-tax be pushed through U.S. Congress?

The wealthy want just what bankers want: the entire economic surplus (followed by a foreclosure on property). They want all the disposable income over and above basic subsistence – and then, when this shrinks the economy, they want the government to sell off the public domain in “privatization” giveaways, and they want people to turn over their houses and any other property they have to the creditors. “Your money or your life” is not only what bank robbers demand. It is what banks themselves demand, and the wealthy 10 per cent of the population that owns most of the bank stock.
And of course, the wealthy classes want to free themselves from the share of taxes that they have not already shed. The flat-tax ploy is their godsend.

Here’s how I think the plan is intended to work. Given the fact that voters have already rejected the flat tax in principle, it can only be introduced by fiatunder crisis conditions. Alan Simpson, President Obama’s designated co-chairman of the “Deficit Reduction Commission” (the euphemistic title given to what is in reality a “Shift Taxes Off Wealth Onto Labor” commission) already has suggested that Republicans close down the government by refusing to increase the federal debt limit this spring. This would create a fiscal crisis and threat of government shutdown. It would be a fiscal 9/11, for the Republicans to trot out their “rescue plan” for the emergency breakdown of government.

The result would cap the tax shift off finance and wealth onto wage earners. Supported by Blue Dog Democrats, President Obama would shed crocodile tears and sign off on the most right-wing, oligarchic, anti-labor, anti-black and anti-minority, anti-industrial tax that anyone has yet been able to think up. The notorious Flat Tax would fall only on wage income (paid by employees and employers alike) and on consumer goods (the value-added tax, VAT), while exempting returns that accrue to the wealthy in the form of interest and dividend income, rent and capital gains.

If you think I’m too cynical, just watch …

BP's Inside Game

Famous Last Words
November 24, 2010

By the morning of May 24, the tide had turned against President Barack Obama in the Gulf. Weeks of indecision at the White House and the Interior Department had shifted the balance of blame. BP was no longer seen as the lone culprit. Now, the Obama administration was viewed by many – including some senior members of their own party – as being fully culpable for the ongoing disaster off the coast of Louisiana. The political situation was so dire that Rahm Emmanuel called an emergency meeting in the Oval Office to regroup. Huddling with Obama and Rahm that bleak morning were Homeland Security Secretary Janet Napolitano, Interior Secretary Ken Salazar, Coast Guard Commandant Thad Allen, climate czar Carol Browner and, most cynical of all, economic advisor Lawrence Summers, author of an infamous 1991 memo at World Bank calling “the economic logic behind dumping a load of toxic waste in the lowest wage country […] impeccable and we should face up to that.”

The president was pissed. In a rare display of emotion, Obama ranted for 20 straight minutes. The target of his anger wasn’t BP but the press. He fumed that he was being unfairly portrayed as being remote and indifferent to the mounting crisis in the Gulf. “Hell, this isn’t our mess,” Obama railed. The president expressed particular contempt for Louisianan James Carville, whose nightly barbs on CNN seemed to have found their mark. After two hours of debate, Obama’s Gulf supposed dream team arrived at the dubious conclusion that the main problem was that there were simply too many public voices speaking for the administration. No one seemed to be in control. There were discordant accounts of the severity of the spill between the EPA and the Interior Department. Agencies were intruding on each other’s terrain.

So, it was decided that the administration would speak with one voice, and that voice would be Thad Allen’s, the portly Coast Guard Commandant who had been lauded in the press as a heroic figure in the aftermath of Katrina. It was the wrong lesson to draw after a month of false moves. The problem wasn’t message control, but a profound bureaucratic lethargy that ceded almost absolute control over the response to the spill to BP. This fatal misstep came courtesy of yet more bad advice from Ken Salazar, who told Obama that under the terms of the Oil Pollution Act of 1990, passed in the wake of the wreck of the Exxon Valdez, BP was legally responsible for the cleanup of the Gulf.

Salazar’s logic was perverse. He reasoned that, by giving free rein to BP under the cover of the Oil Pollution Control Act, the administration could keep its hands clean and blame any failures in the Gulf on the oil company. This strategy blew up in the face of the administration. It was all over once Rep. Ed Markey pressured BP into releasing the live video feeds from the remote-controlled submersibles, showing the brown geyser of crude erupting from the remains of the failed blowout preventer.

But then the administration was boxed into an untenable position. Instead of distancing itself from BP, the Obama team, thanks to Salazar, found itself shackled to the company. Two weeks after the blowout, a top Coast Guard official went so far as to praise “BP’s professionalism” during a nationally televised press briefing.

It should have been different. Within hours of the explosion, the federal government should have seized control of both the well and the cleanup operations. The only responsibility that should have been left to BP was to sign checks for billions of dollars. The authority for such a takeover derives from an administrative rule called the National Contingency Plan, which calls for the federal government to take authority over hazardous waste releases and oil spills that pose “a substantial threat to the public health or welfare of the United States based on several factors, including the size and character of the discharge and its proximity to human populations and sensitive environments. In such cases, the On-Scene Coordinator is authorized to direct all federal, state, or private response and recovery actions. The OSC may enlist the support of other federal agencies or special teams.”

The National Contingency Plan calls for the On-Site Coordinator “to direct all federal, state and private response activities at the site of discharge.” The Plan, written in 1968, came in response to one of the world’s first major oil spills and cleanup debacles. On March 18, 1967, the Liberian-flagged supertanker Torrey Canyon, taking a dangerous shortcut near Seven Stones reef, struck Pollard’s Rock off the coast of Cornwall, gouging a deep hole into the holds of the ship. Over the course of the next few days, oil drained into the Atlantic. Then, on Easter the ship itself broke in two, releasing all 35 million gallons of crude oil, owned by, yes, British Petroleum into sea. The wreck plunged the government of Harold Wilson into crisis mode. The government allowed BP to pour millions of gallons of an unproven but toxic dispersant on dark-stained waters – the chemical had been manufactured by a subsidiary of the oil company. When that proved to have little effect, the Wilson government called upon the Royal Air Force to conduct a bombing raid on the Torrey Canyon. The planes dropped 42 bombs in effort to sink the ship and burn off the oil slick. The sea burned for two weeks, but the incendiary raids did little to staunch the oily tides. In the end, more than 120 miles of the Cornish Coast were coated in oil and the spill took a heavy toll on fish, birds and sea mammals. The crude spoiled beaches from Guernsey to Brittany.

In order to avoid a similar cleanup folly in the U.S., the National Contingency Plan called for a single agency to take swift control over big oil spills. That agency was the newly created EPA. But when Rahm Emmanuel summoned the administration’s oil response team to the strategy session in the Oval Office, he didn’t send an invitation to Lisa Jackson, the spunky head of the Environmental Protection Agency. Why was Jackson missing? Because she had reportedly incurred the wrath of BP executives for pressing the company to curtail its controversial use of the toxic dispersant Corexit. Also noticeably absent from the Obama brain trust were two other officials who might have contributed a more realistic appraisal of the deteriorating situation in the Gulf: Jane Lubchenko, director of the National Oceanic and Atmospheric Administration NOAA, and Energy Secretary Stephen Chu, owner of the Nobel Prize, so often invoked by White House press secretary Robert Gibbs as a public assurance that the administration was on top of the situation. Each had been inexplicably exiled from Obama’s inner circle.

It didn’t help, of course, that in the early days of the disaster Obama’s officials opted to downplay the severity of the oil gusher erupting out of the crumpled riser pipe 5,000 feet below the surface of the Gulf. In the first official remarks from the administration after the explosion of the Deepwater Horizon rig, Coast Guard rear admiral told the press that the spill was expected to be very minor, amounting to only the few thousands gallons of crude present in the mile-long pipe at the time of the accident. This false information flowed directly from BP. A few days later, after the incinerated rig had toppled and sank to the bottom of the Gulf, this specious number was revised upward to a total of no more than 1,000 gallons a day. So said Admiral Thad Allen, head of the Coast Guard and Incident Commander for the Gulf. Again, Allen had made this optimistic assessment based solely on information coming from BP. Two weeks later, the upper limit for the leak was raised to 5,000 barrels a day.

But NOAA knew better. In fact, in the hours after the spill, top NOAA officials gathered in Seattle for an emergency session that was streamed live on the agency’s website. The video feed, which was later removed from the website, captured the agency’s top scientists at work. Their initial survey of the scope of the spill proved prescient. One scientist warned that the agency needed “to be prepared for the spill of the decade.” Another NOAA scientist charted out the worst-case scenario on a whiteboard: “Est. 64k – 100k barrels a day.” Right on the money, even though it took the Obama administration more than 50 days to admit that the oil was flowing at a rate of more than 14,000 barrels a day.

Of course, the administration could have simply subpoenaed BP’s own records, as Congressman Ed Markey eventually did. On June 20, Markey released an internal memo from BP that estimated that as much as 100,000 barrels a day might be surging out of the broken wellhead. Far from fact-checking BP’s information, some members of the Obama administration were acting as conduits for the company’s lowballing. None played a more important role than Sylvia Baca, whose facility with moving seamlessly between the government and the corporations she was meant to regulate should had won her frequent flyer points for trips through the revolving door. Last summer, Ken Salazar appointed Baca to serve as assistant administrator for lands and minerals of the scandal-rife Minerals Management Service (MMS). This powerful but shadowy post did not require Senate confirmation. Thus, Baca’s previous career did not become the subject of public inquiry.

Salazar had plucked Baca right from the ranks of BP’s executive suites, where, according to her CV, she served “as general manager for Social Investment Programs and Strategic Partnerships at BP America Inc. in Houston, and had held several senior management positions with the company since 2001, focusing on environmental initiatives, overseeing cooperative projects with private and public organizations, developing health, safety, and emergency response programs and working on climate change, biodiversity and sustainability objectives.” Prior to joining BP, Baca spent six years at the right hand of Bruce Babbitt, serving as assistant secretary of the Interior for Lands and Minerals Management.

Baca’s years in the Clinton administration proved very productive for the oil industry as a whole and her future employer in particular, a period when oil production on federal lands soared far above the levels of the first Bush administration. An internal Interior Department memo from April 2000 spelled out the achievement for Big Oil:

“We have supported efforts to increase oil and gas recovery in the deep waters of the Gulf of Mexico; we have conducted a number of extremely successful, environmentally sound offshore oil and gas lease sales; and we have opened a portion of the National Petroleum Reserve in Alaska to environmentally responsible oil and gas development, where an estimated 10 trillion cubic feet of recoverable gas resources lie in the northeast section of the reserve.”

The memo goes on to highlight the feats in the Gulf of Mexico, which saw a tenfold increase in oil leasing during the Clinton years.

“From 1993 to 1999, 6,538 new leases were issued covering approximately 35 million acres of the Outer Continental Shelf…. Lease Sale 175 in the Central Gulf of Mexico, held on March 15, 2000, offered 4,203 blocks (22.29 million acres) for lease. The Interior Department received 469 bids on 344 blocks. There were 334 leases awarded….More than 40 million acres of federal OCS blocks are currently under lease. Approximately 94 per of the existing OCS leases (7,900) are in the Gulf, and about 1,500 of these leases are producing…. Issued over 28,000 leases and approved over 15,000 permits to drill…Implemented legislation changing the competitive lease term from five years to ten years, allowing lessees greater flexibility in exploration without endangering the lease.”

Thus had the table been set for the depredations of the George W. Bush administration.

Mission accomplished, Baca settled into her high-paying gig as a BP executive. One of Baca’s roles was to recruit Hollywood celebrities to help greenwash the oil giant as environmentally enlightened corporation, which was engaged in a mighty war against the evil forces of climate change. When Baca left BP to join the Obama administration, they weren’t left in the lurch. As the curtains closed on the Bush administration, BP recruited one of the Interior Department’s top guns to join its team. As the chief of staff for the MMS in the Gulf Region, James Grant had worked to make sure that deepwater leases moved forward with, as he put it in one memo, “few or no regulations or standards.”

Having succeeded in this endeavor, BP enticed Grant to join their team as their “regulatory and environmental compliance manager” for the Gulf of Mexico, an assignment that included shepherding the Deepwater Horizon through the regulatory maze at MMS. Grant began lobbying his former colleagues in the Interior Department to open currently protected areas to oil leasing, particularly in the eastern Gulf of Mexico near the coast of Florida. Grant also warned the Obama administration, including his former corporate colleague Sylvia Baca, not to cave to demands by environmentalists for “policies that may establish exclusionary zones, disrupt MMS leasing or affect opportunities for economic growth.” He needn’t have worried.

* * *

It’s clear that Sylvia Baca should never have been eligible to resume her job at the Interior Department. Obama had piously pledged to close the revolving door and bar corporate lobbyists from taking posts in agencies that regulated the activities of their former employers. Several environmental lobbyists were denied positions in the Interior Department and EPA under these supposedly ironclad ethics rules. However, Baca slipped through at the behest of Salazar who made a special appeal to Attorney General Eric Holder. Salazar told Holder that Baca was an “indispensable” member of his team, emphasizing her “detailed knowledge of Interior's land and energy responsibilities.”

According to Deputy Interior Secretary David Hayes, Baca recused herself from all leasing decisions regarding BP. However, sources inside the Interior Department tell me that Baca played a key role in a procedural decision in the early days of the Obama administration that allowed the Deepwater Horizon project and Big Oil operations on federal lands to move forward with scant environmental review. The National Environmental Policy Act (NEPA) is a federal law passed during the glory days of environmental legislation, otherwise known as the Nixon administration. It requires a full-scale environmental impact statement (EIS) for any federal project that might pose a “significant impact on the quality of the human environment.”

These EISs often run to more than a 1,000 pages in length and evaluate the possible ecological, social and economic consequences of the proposal, including worst-case scenarios. These documents are prepared by the permitting agency with consultation from the Fish and Wildlife Service and the EPA. But an administrative order during the second Bush administration ordered the Minerals Management Service to issue “categorical exclusions” from NEPA compliance to Big Oil projects in the Gulf and Alaska. In addition, the Bush administration allowed the oil companies to prepare their own safety and environmental plans, which would then be rubber-stamped by officials at MMS. From 2001 through 2008, more than 2,400 oil leases had been allowed to go forward in the Gulf without any serious environmental review.

When the Obama administration came into power, this policy was under furious legal and political assault by environmental groups. But Salazar was zealous that there would be no interruption in the pace of oil leasing in the Gulf. In fact, he wanted it speeded up. Restoring NEPA compliance to the oil industry, Salazar’s enforcer, Baca warned, would slow down the approval process for leases by a year or more and, even worse, make the projects vulnerable to protracted litigation by environmentalists. She counseled that it would be better to stick with the Bush era rules. Salazar agreed.

So, it came to pass that on April 6, 2009, the Interior Department granted BP a categorical exemption for Lease 206, the Deepwater Horizon well. The BP exploration plan included a skimpy 13-page environmental review, which called the prospect of a major spill “unlikely.” The company told the Interior Department that in the event of a spill “no mitigation measures other than those required by regulation and BP policy will be employed to avoid, diminish or eliminate potential impacts on environmental resources.” The request was approved in a one-page letter that imposed no special restrictions on the oil company, warning only that BP “exercise caution while drilling due to indications of shallow gas.”

Famous last words.

Join in on the World's Biggest Bank Run This December

The simple act of removing all of our money from the banks, and doing so in mass on the same day - December 7th - would put a huge scare in the financial barons.
By Robert E. Prasch, AlterNet
Posted on November 24, 2010

"A spectre is haunting Europe." Its not the revolution that Karl Marx supposed would come about. Nor is it Parisian students and workers taking to the streets as in May 1968. It is the vision of hordes of Europeans striking back at those who caused the 2008 financial crash. This time, organizers are calling for the use of a new weapon, one available to any of us with a bank account. It is the simple act of removing all of our money from the banks, and doing so in mass on the same day - December 7th.

While it is hard to know who first thought of this marvelous act of political theater, it has begun to take serious traction in France and is now spreading across Europe. It has especially taken off since a ringing endorsement of the idea began making the rounds on YouTube and Facebook by the always amusing, and surprisingly thoughtful, ex-soccer star Eric Cantona. Cantona, already famous for his performances with Leeds United, Manchester United, and the French National Team, has remained in the public eye while developing new interests in photography, film, and live theater (Happily for the discerning taste of the French public, he is an excellent photographer, and in the latter endeavors he has the advantage of being mentored by a well-established and highly-talented young actress - his wife, Rachida Brakni).

Of late, the famously mercurial temper that Cantona exhibited on and off the soccer pitch has been redirected from rivals and unruly fans. A prominent target is French President Nicolas Sarkozy's proposal to create a ministry, museum, and mass public debate on "national identity, all of which Cantona publically ridiculed as "idiotic." His sights are now trained on the banking and financial system that he - correctly - holds responsible for France's current economic problems. This is important because Sarkozy and the EU leadership is using this crisis to erode welfare state protections even as ostensibly scarce public monies are deployed to shore up the banks most responsible for the problem.

Which brings us to the economics of a mass withdrawal of deposits from the banks. Will it bring about an actual bank run or financial crash? Certainly not. For one thing, an organized and deliberate action such as Cantona proposes lacks the element of panic so characteristic of bank runs. Additionally, the banks and the central banks overseeing them will have time to prepare for the event, and should be able to reallocate their holdings of cash, reserves, and other assets in advance. If necessary, banks can always borrow short-term funds on the inter-bank market or even directly from the central bank. A mass withdrawal should, however, shrink the profitability of banks, as retail deposits are normally considered cheap and stable sources of funds with which to finance loans. Large European banks, relative to their American peers, are more dependent on retail deposits, so they will especially miss these funds when the time comes to calculate profits and bonuses.

But what of the politics? Here in the United States it is now overwhelmingly clear that a dozen or so of the largest financial institutions responsible for the crash and ensuing recession have gained, not lost, by their irresponsible decisions. They repeatedly tell us that they have "learned lessons." This is true, they have: Learned that their past decisions have enriched senior management beyond belief. Learned that their market share is now substantially larger than before the crash. And learned that the government has deemed them Too Big To Fail (this latter designation lowers their cost of funds and enhances their profitability). Showing admirable "bi-partisanship," Republican and Democratic administrations have worked hard and seamlessly to bring about these "lessons." This summer, the Dodd-Frank Financial Reform and Consumer Protection Act enshrined the perspective of financial elites that reform should be primarily symbolic. In a sentence, over $12,000,000,000 of stock market, real estate, and other asset values disappeared, while rates of home foreclosures and unemployment soared, with virtually NO political or legal consequences. I might be a cynic, but I hope to never be as cynical as those who engineered these outcomes.

Bringing Cantona's symbolic protest here to the United States could mark the beginning of a new politics, one marked by actions taken outside of the normal party process where "hope and change" are now effectively stifled by the duplicity of our elected officials. Moreover we, the people, need a victory. We need to do something that simultaneously creates a spectacle and an unmistakable political message. So let us join with Cantona and the good people of Europe by withdrawing our money from the four largest American banks on December 7th (Bank of America, J.P. Morgan Chase, Citigroup, and Wells Fargo). They deserve our contempt several times over, so lets present them with their just rewards! Sadly, the next largest two in size, Goldman Sachs and Morgan Stanley, do not have many retail accounts. But perhaps we could gesture at them with a middle finger on our merry way to withdraw money from the others!

In preparation, open an account at a credit union or a community bank over the next few weeks so you will have somewhere to put your money when the protest ends. If you are worried about the security of your funds on the day of the protest, withdraw all but a token sum beforehand and then close your account on December 7th.

Perhaps happiest of all, this protest has no downside. You don't even need a permit -- after all, you are just going to the bank! Your actions will tie up their bank operations all day, and their back offices for some time afterwards. While waiting in line, you will have a chance to meet friends, neighbors, and like-minded fellow citizens who care deeply about the future of this nation. You will hurt the profits and the public image of several irresponsible and predatory financial institutions. You will embarrass the political leadership of the nation. And finally, your money will almost certainly end up in a more service-oriented and socially responsible institution. You will be glad that you turned out on December 7th.

TSA's Gestapo Empire

A Greater Threat Than the Terrorists

It doesn’t take a bureaucrat long to create an empire. John Pistole, the FBI agent who took over the Transportation Security Administration on July 1 told USA Today 16 days later that protecting trains and subways from terrorist attacks will be as high a priority for him as air travel.

It is difficult to imagine New Yorkers being porno-screened and sexually groped on crowed subway platforms or showing up an hour or two in advance for clearance for a 15 minute subway ride, but once bureaucrats get the bit in their teeth they take absurdity to its logical conclusion. Buses will be next, although it is even more difficult to imagine open air bus stops turned into security zones with screeners and gropers inspecting passengers before they board.

Will taxi passengers be next? In those Muslim lands whose citizens the US government has been slaughtering for years, favorite weapons for retaliating against the Americans are car and truck bombs. How long before Pistole announces that the TSA Gestapo is setting up roadblocks on city streets, highways and interstates to check cars for bombs?

That 15 minute trip to the grocery store then becomes an all day affair.

Indeed, it has already begun. Last September agents from Homeland Security, TSA, and the US Department of Transportation, assisted by the Douglas County Sheriff’s Office, conducted a counter-terrorism operation on busy Interstate 20 just west of Atlanta, Georgia. Designated VIPER (Visible Inter-mobile Prevention and Response), the operation required all trucks to stop to be screened for bombs. Federal agents used dogs, screening devices, and a large drive-through bomb detection machine. Imagine what the delays did to delivery schedules and truckers’ bottom lines.

There are also news reports of federal trucks equipped with backscatter X-ray devices that secretly scan cars and pedestrians.

With such expensive counter-terrorism activities, both in terms of the hard-pressed taxpayers’ money and civil liberties, one would think that bombs were going off all over America. But, of course, they aren’t. There has not been a successful terrorist act since 9/11, and many doubt the government’s explanation of that event.

Subsequent domestic terrorist events have turned out to be FBI sting operations in which FBI agents organize not-so-bright disaffected members of society and lead them into displaying interest in participating in a terrorist act. Once the FBI agent, pretending to be a terrorist, succeeds in prompting all the right words to be said and captured on his hidden recorder, the “terrorists” are arrested and the “plot” exposed.

The very fact that the FBI has to orchestrate fake terrorism proves the absence of real terrorists.

If Americans were more thoughtful and less gullible, they might wonder why all the emphasis on transportation when there are so many soft targets. Shopping centers, for example. If there were enough terrorists in America to justify the existence of Homeland Security, bombs would be going off round the clock in shopping malls in every state. The effect would be far more terrifying than blowing up an airliner.

Indeed, if terrorists want to attack air travelers, they never need to board an airplane.

All they need to do is to join the throngs of passengers waiting to go through the TSA scanners and set off their bombs. The TSA has conveniently assembled the targets.

The final proof that there are no terrorists is that not a single neoconservative or government official responsible for the Bush regime’s invasions of Iraq and Afghanistan and the Obama regime’s slaughters of Pakistanis, Yemenis, and Somalians has been assassinated. None of these Americans who are responsible for lies, deceptions, and invasions that have destroyed the lives of countless numbers of Muslims have any security protection. If Muslims were capable of pulling off 9/11, they are certainly capable of assassinating Rumsfeld, Wolfowitz, Perle, Feith, Libby, Condi Rice, Kristol, Bolton, Goldberg, and scores of others during the same hour of the same day.

I am not advocating that terrorists assassinate anyone. I am just making the point that if the US was as overrun with terrorists as empire-building bureaucrats pretend, we would definitely be experiencing dramatic terrorist acts. The argument is not believable that a government that was incapable of preventing 9/11 is so all-knowing that it can prevent assassination of unprotected neocons and shopping malls from being bombed.

If Al Qaeda was anything like the organization that the US government claims, it would not be focused on trivial targets such as passenger airliners. The organization would be focused on its real enemies. Try to imagine the propaganda value of terrorists wiping out the neoconservatives in one fell swoop, followed by an announcement that every member of the federal government down to the lowest GS, every member of the House and Senate, and every governor was next in line to be bumped off.

This would be real terrorism instead of the make-belief stuff associated with shoe bombs that don’t work, underwear bombs that independent experts say could not work, and bottled water and shampoo bombs that experts say cannot possibly be put together in airliner lavatories.

Think about it. Would a terror organization capable of outwitting all 16 US intelligence agencies, all intelligence agencies of US allies including Israel’s Mossad, the National Security Council, NORAD, air traffic control, the Pentagon, and airport security four times in one hour put its unrivaled prestige at risk with improbable shoe bombs, shampoo bombs, and underwear bombs?

After success in destroying the World Trade Center and blowing up part of the Pentagon, it is an extraordinary comedown to go after a mere airliner. Would a person who gains fame by knocking out the world heavyweight boxing champion make himself a laughing stock by taking lunch money from school boys?

TSA is a far greater threat to Americans than are terrorists. Pistole has given the finger to US senators and representatives, state legislators, and the traveling public who have expressed their views that virtual strip searches and sexual molestation are too high a price to pay for “security.” Indeed, the TSA with its Gestapo attitude and methods, is succeeding in making Americans more terrified of the TSA than they are of terrorists.

Make up your own mind. What terrifies you the most. Terrorists, who in all likelihood you will never encounter in your lifetime, or the TSA that you will encounter every time you fly and soon, according to Pistole, every time you take a train, a subway, or drive in a car or truck?

Before making up your mind, consider this report from on November 19: “TSA officials say that anyone refusing both the full body scanners and the enhanced pat down procedures will be taken into custody. Once there the detainees will not only be barred from flying, but will be held indefinitely as suspected terrorists . . . One sheriff’s office said they were already preparing to handle a large number of detainees and plan to treat them as terror suspects.”

Who is cowing Americans into submission, terrorists or the TSA Gestapo?

Starve the Wall Street Beast

A Citizen's Counter Strategy

Dialogue on the economic crisis has focused on symptoms: bailouts, corruption on Wall Street, collapse in housing prices, intractable unemployment, Federal Reserve monetary policy. Most people have been socialized to silence on the topic of the disease itself: debilitating wealth concentration. We hear little on the overwhelming argument that wealth concentration is the root cause of the lingering crisis because within milliseconds of the words escaping into the public arena, screams of “Socialist! Socialist!” proliferate; an army of right wing talk radio buffoons fill the airwaves with dire warnings of the growing communist threat of wealth redistribution; Rick Santelli spazzes out on CNBC; and the Tea Partiers figuratively (or literally) stomp on us.

The people who scream the loudest aren’t the super rich who control the wealth; they’re part of a labyrinthine network of hired hands who function as high pitch bodyguards for the wealth hoarders. The actual super rich are the folks who appear on the Forbes list of the wealthiest Americans; people like Charles and David Koch, each worth $21.5 billion, who create multi layers of front groups, like Americans for Prosperity, to make it not only socially acceptable to hoard wealth but social nirvana. The Kochs hold secret confabs with their wealthy friends once a year, fingering their worry beads and plotting to keep the Bush tax cuts for the wealthiest, lest they become number 6 on the Forbes list of billionaires instead of number 5. This, while 43 million of their fellow Americans live beneath the poverty level; including one in every 5 children.

David Barber, Associate Professor of American History at the University of Tennessee, is not afraid of the cacophony from the wealth hoarders’ cabal, writing bluntly about the dangers of wealth concentration. In response to an email query last week, Dr. Barber said:
“American society’s fantastically skewed distribution of wealth stands as one of the main structural fault lines underpinning the Crash. America’s richest one percent of the population own over forty percent of America’s wealth — exclusive of home ownership — in this, the most opulent society history has ever known. On the other hand, the bottom sixty percent of Americans own approximately one percent of all of America’s wealth. Maintaining the Bush tax cuts for the rich only perpetuates a part of the contradiction which brought on the present phase of the world economic crisis.”
Dr. Barber’s statistics come from a study conducted by Edward N. Wolff for the Levy Economics Institute of Bard College in March 2010. Other findings from that study include the following:

The richest 1 percent received over one-third of the total gain in marketable wealth over the period from 1983 to 2007. The next 4 percent also received about a third of the total gain and the next 15 percent about a fifth, so that the top quintile collectively accounted for 89 percent of the total growth in wealth, while the bottom 80 percent accounted for 11 percent.

In 2007, the top 1 percent of households owned 38 percent of all stocks; the top 5 percent owned 69 percent; the top 10 percent held 81 percent.

Debt was the most evenly distributed component of household wealth, with the bottom 90 percent of households responsible for 73 percent of total indebtedness.

Wealth concentration in too few hands while the general populace is saddled with too much debt to buy the goods and services produced by the corporations, in whom the wealthiest hold 81 percent of the stock, is a replay of the conditions leading to the crash of 1929 and the ensuing Great Depression. (The Social Security system was borne out of that debacle. This time around, the wealthiest hope to use the funds from the bottom 90 percent flowing into the Social Security trust to prop up stock prices for the benefit of the top 10 percent. Any action today which postpones the inevitable process of more equitable wealth distribution, such as privatizing Social Security or retaining the Bush tax cuts for the wealthiest, will simply hasten the onset of more economic pain which will broaden out to devour the wealth of the upper quintiles through deflation.)

Writing in his book, “The Worldly Philosophers,” Robert Heilbroner explained the situation leading up to the depression of the 1930s:
"The national flood of income was indubitably imposing in its bulk, but when one followed its course into its millions of terminal rivulets, it was apparent that the nation as a whole benefited very unevenly from its flow. Some 24,000 families at the apex of the social pyramid received a stream of income three times as large as 6 million families squashed at the bottom -- the average income of the fortunate families was 630 times the average income of the families at the base…And then there was the fact that the average American had used his prosperity in a suicidal way; he had mortgaged himself up to his neck, had extended his resources dangerously under the temptation of installment buying, and then had ensured his fate by eagerly buying fantastic quantities of stock – some 300 million shares, it is estimated – not outright, but on margin, that is, on borrowed money.”
In both eras, Wall Street ceased being an allocator of capital to worthy enterprises and became an institutionalized system of rigged wealth transfer. The primary artifices this time around included issuing knowingly false stock research; lining up large institutional clients to buy at predetermined prices (laddering) on the first day of a new issue of stock – this made the price appear to soar and thus sucked in the small investor; threatening to take the stock broker’s commission away (penalty bid) if the broker let the small investor take profits in the newly issued stock – the practice was known as flipping and was reserved for the big boys. When the tech mania went bust and the rigged game was revealed, the small investor left in droves. Wall Street, with the Fed’s able assistance, fueled the next bubble – housing – and crafted complex derivatives to turn this market into a cash cow for Wall Street and foreclosures for Main Street.

The January 21, 2010 Supreme Court decision to allow corporations to have staggering financial influence in our elections (Citizens United v. Federal Election Commission) and the November 2, 2010 results of the midterm election should send a bone chilling message. Help is not on the way. The end game of this massive wealth concentration is long-term deflation, economic misery and multiple generations who will look back on us as the hapless society who couldn’t tame the Wall Street greed machine for want of a plan.

Thinking Americans can no longer wait for politicians to save us. I offer below ten ideas to get started on the first course of starving the Wall Street beast. And, just to be clear to those perched on the edge of their seats preparing to scream “Socialist!,” I’m not suggesting “redistributing” wealth; I’m suggesting putting the wealth back into the hands from which it was taken in a rigged wealth transfer scheme.

(1) Shorten Your Home Mortgage: Former Supreme Court Justice Louis Brandeis summed it up: "We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both." The Wall Street beast is thriving on interest on our debt and using it to hire lobbyists and fund politicians who will work for their interests, not ours.

According to March 31, 2009 data from the Federal Deposit Insurance Corporation, four Wall Street behemoths control 35 percent of all the insured bank deposits in the U.S. and 46 percent of the assets (although the quality of those “assets” is very much a subject of debate). Those firms are: Bank of America Corporation, JPMorgan Chase & Co., Wells Fargo & Co. and Citigroup, Inc. That leaves the other 8,242 FDIC insured banking institutions to share the balance. The total domestic deposits were $7.5 trillion with total assets of $13.5 trillion as of March 2009. That is far too much wealth concentration in too few hands as we’ve sadly learned from having to bail out those four institutions.

Seek your accountant and/or financial advisor’s advice about converting your 30 year mortgage to a 15 year to move wealth from the bank’s shareholders pockets to yours. Rates have never been more favorable for such a move. Typically, over the life of the loan, you will save tens of thousands of dollars of interest. You can look at the savings for your specific situation by clicking on the mortgage calculator at (I’m not endorsing any of the bank loans offered at this site since I haven’t done any research in that area; I’m just suggesting the use of the mortgage calculator.)

Talk to your children before they buy a home about the interest differential between a 30-year and 15-year mortgage over the life of the loan. Show them how to use the mortgage calculator.

(2) Think Local: Consider moving money as it becomes liquid out of the big Wall Street banks that have an iron grip on your Congress and moving it into FDIC insured certificates of deposit at your community bank (being careful not to exceed the insurance limits). A good rule of thumb is to ladder maturities to coincide with when you will need the money. Again, you should consult with your accountant and/or financial advisor. This will also help provide loan funds to local businesses and residential housing in your area.

(3) Start a Business: Don’t worry about the possible arrival of the pink slip; be proactive. Start a business on the side. Do well by doing good: what product or service can you provide that a struggling consumer wants and can afford. (Ideas might include: debt counseling, low cost child care, foreclosure counseling, a pick-your-own fruit and vegetable business if you own farm land, consignment shop, home staging services to help with quicker resales.)

(4) Invest Wisely: Get smart with your 401(k). Investing in the S&P 500 is simply feeding the beast; the beast that’s using your cheap capital to hire lobbyists, create PACs and separate you from representative government. Some 401(k) plans allow you to roll over 50 percent or more to your own IRA after reaching a certain age. Call your benefits office and find out what your options are. Speak to your accountant and/or financial advisor before making any move. You may also want to consider opening an IRA at a community bank and buying insured CDs as an alternative to putting more funds in the 401(k).

(5) Check Out Credit Union Membership: Do you have a family member that belongs to a Credit Union? Chances are they can get you an account there. If you need to use a credit card, try to get one through the credit union at a reasonable rate and then cut up any high-rate card. It’s an outrage that some of the banks that required a citizen bailout are getting their money from the Federal Reserve at almost no cost while charging struggling citizens 20 percent interest.

(6) Don’t Use Credit Cards from Corporations That Abuse You: All of the following have one thing in common: Home Depot, Exxon Mobil, Shell, Macy’s, Sears, Zales. They all extend credit to their customers on a Citigroup credit card. Forty million customers are helping to prop up Citigroup and its anti-consumer, anti-citizen practices by using these cards. Citigroup makes its workers sign away their rights to go to court (see number 8 below) and has serially abused investors through corrupt practices.

(7) Brand Attacks: Chances are high that your local storeowners don’t have a PAC and lobbyists on K Street working against your interests? Reward them with your business and starve the S&P 500 firms until they get the message: if you want me to honor your brand, honor my right to representative government.

(8) Return the Courts to Workers: Many of the largest corporations force workers to sign away their rights to the Nation’s courts as a condition of employment. It’s called mandatory arbitration and it’s an unfair process that is rigged to favor the corporation. If you interview for a new job, ask if the company has such a policy and walk away if they do.

(9) Complain: Don’t let shady practices go undetected. Write a detailed report and file it with the appropriate body: local district attorney, state attorney general’s office, consumer protection groups; and write a letter to the editor to the local paper. This helps good businesses prosper and starves dirty businesses of customers.

(10) Just Say No: To frontal nudity photographs/skin radiation/genitalia groping; all just to board a plane. Don’t fly. You will be standing up for civil rights and starving Wall Street. Body scanner